DGGI Issues ₹10,000 Crore Tax Notices to 10 Foreign Airlines, Including Emirates and Lufthansa

The Directorate General of Goods and Services Tax Intelligence (DGGI) has issued show cause notices to ten foreign airlines over an alleged ₹10,000 crore in unpaid taxes. The list includes major carriers such as Emirates, Lufthansa, British Airways, Singapore Airlines, and Oman Air.

The notices, dispatched over the past three days, address unpaid tax dues related to the import of services by these airlines’ Indian branches from their head offices. The DGGI argues that these services, which include aircraft maintenance and crew payments, fall under GST liability but have not been paid.

The tax period in question spans from July 2017 to March 2024. While some airlines have provided the required information, others have failed to respond adequately. Lufthansa has stated that it has submitted all necessary data and is cooperating with the DGGI.

According to the DGGI, these services should be subject to GST as they are rendered from one entity to another. This stance contrasts with a June 26 circular, which outlines GST applicability for related entities but does not cover all services provided by airlines.

The issue emerged following an investigation launched in August 2023, which included discussions with airline executives in late 2023 and early 2024. Airlines have contended that GST should only apply to services taxable in India, and they have sought assistance from their respective country embassies.

Industry experts have noted that the June 26 circular may not fully address the complexities of the airline industry’s tax obligations. Saurabh Agarwal, a tax partner at Ernst & Young, highlighted that the circular might not cover the unique business models of foreign airlines and shipping lines.